Published on in Financial ServicesInnovationDigital Transformation

By 2025, 50% of insurers will be offering real-time risk prevention as a service to retail customers in both life and non-life, either directly or through digital partnership ecosystems. By doing so they will dramatically improve their customers’ experiences. Learn more about these technologies with IDC’s Patrick van Brussel.

Insurers are the children of Pandora. Not only would they not exist without the release of the proverbial evils, plagues and catastrophes, but by offering products and services to protect their customers from the negative financial consequences of such events, they make sure the lid is sealed with despair imprisoned inside.

To fully enjoy our lives, we need to forget about all the risks to which we are exposed. What insurers sell is the confidence that, if something bad happens tomorrow, the financial consequences of such events will be transferred to them and we will be compensated.

Risk Transfer Is the Essence of Insurance — and Always Will Be

Insurers sell lightness of mind to customers who, by nature, tend to immediately forget about the risks they face in their daily lives — and quickly forget about the value they bought when writing an insurance contract.

This leads to a situation in which, almost by design, the NPS of the insurance industry is condemned to stay in the lowest third of all industries. In most cases, the customer’s experience is reduced to paying a yearly premium (which is usually perceived to be too high) and reporting a claim once every 10 to 15 years (which is never a source of great satisfaction).

But new technologies developed over the past 5 to 10 years — such as BDA, ML, AI and IoT — are now reaching their maturity. These technologies enable insurers to digitally transform their businesses, extract themselves from their traditional models by offering new products and services, and encourage winning experiences along the whole customer journey.

Now Is the Time for Insurers to Add Risk Prediction and Prevention to Their Risk Transfer Offers

By exploiting the capacities of connected devices (IoT), predictive models or mobile technologies, insurers can now collect and analyse data from multiple sources in real time to provide their clients, in all lines of business, with advice on how to better eliminate, avoid and reduce risks, and alert them to potential risks. When there are damages, they can immediately suggest or activate measures to reduce the negative consequences of those events. And they can do all this in a contextual and personalised way.

By doing so, insurers will finally be able to develop high-frequency and positive interactions with their clients and leave behind the traditional low-frequency neutral or negative points of contact. But to truly improve their customers’ experiences, insurers must not treat such services as mere marketing freebies or gadgets.

When they invest in the technology to enable risk prevention (collecting and analysing data to transform it into value-adding advice) they must also invest to better understand the cognitive profiles of their customers, and must learn how to interact digitally with each of them in such a way that they listen and act accordingly.

Most Insurers Tend to Develop One-Size-Fits-All Virtual Interfaces in Their Customer Journeys, as if We’re All Equally Sensitive to the Same Logic and Stimuli

One-size-fits-all communications are fine when you need to provide instructions. But when it comes to convincing someone to do something that they are free to accept or not, when you try to remotely influence the behaviours of free-thinking individuals, differentiated and personalised contextual interactions need to be applied.

Again, the newest technologies enable such cognitive-based, customer-orientated interactions to be developed (NPL, AI emotion recognition, etc.) in support of already tested techniques such as offering vouchers or discounts.

Insurers still have to bear in mind that technology as such is only a commodity that is accessible to anyone. Players in other industries have access to the same raw capacities and can offer similar services. In fact, they already do.

But only insurers can really master the science of risk management and only they have the deep knowledge required to fully exploit these new technologies to deliver better, faster and truly value-adding services — further tightening the lock on Pandora’s box and keeping their customers’ minds free of worries.

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